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tv   Mad Money  NBC  November 17, 2015 3:00am-4:00am CST

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let's start with basic industry. steel, metal. have you seen u.s. steel lately? down 63% for the year. 63. with one of the biggest markets being shut out by low oil prices and with the chinese endlessly dumping steel around the world. companies underneath him will have a hard time making it. there is an oil and gas company ak steel holding down for the year. copper prices plummeting in oil and gas doing poorly. stock based on hope that china comes back online and the fed does nothing. caterpillar is an amazing stock as well as cummings. the stocks are down.
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same with joy global down 66%. i can barely bring myself to talk about coal and iron. it was thrilling to hear the hedge funds tighghn, einhorn made a stand on con sol energy, a coal company which had the stock up more than 7% today. that's more than 76% for the year. the iron work company, casablanca, managed to install its own people at the top. that stock is down 62% for the year. alcoa, i'm in favor of breaking into commodity. an engineering company. that's what i call it. the stock is down nearly 48%. the chinese have too much aluminum. i'm arguing with kyle clinele feld who said the world needs more aluminum. alcoa stocks are saying otherwise.
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down only 16% for the year. grain processor archer daniels. mosaic down 26 and 28% respectively. fertilizer, potash down 42%. intrepid potash really less trepid down 74%. ouch.. all the weakness in the market is concentrated in the industry trals until you look at retail. do you know macy's is down 41% for the year. an astounding decline for them. the stock for nordstrom down and chico's. bed, bath and beyond down 30%. urban outfitters down 40%. not a welcome sign. especially when anthropololoe just added a restaurant chain. it'sle real good. the only real activity. gap has fallen 40%.
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whole foods climbed a similar mountain. you don't get e spectacular sell-offs for no reason. let's look at consums reign it. walmart doesn't shed 33%. if the fed heard what i said would it tighten? would it matter? i don'n'know. toy's rally says it wouldn't. oil and gas stocks were up. kindermorgan. the best of the best has fallen 43% this year. marathon down 37. range resources, an amazing natural gas re source down 35. ultra peat and southwestern energy down. these are amazing numbers. why aren't the averages down more for 2015? facebook, amazon, google, netflix have beaten projections. investors are sure the fed is going to raise rates.
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the banks do better in a higher rate environment. the big drug andndood stops are stabilizing. people think they will weather the storm of an economic downturn. there are a ton of positive special situations out there doing well. general electric shed some business. they want to grow 18% run-up. tom nant internatitial company. we have the trend in autos peaking here. i put it out to remind people what's happening under today's robust trading. it's why the market would explode higher if the feds listen to what i said about the stock prices and what they are saying and said, you know what, we'll see you next year. it's why the people on twitter who pleaded, begged for a blessing to sell everything, how manile times did i see that tweet?
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encouragelement. here's the bottom line. there is an ugly under belly that was today's rally was jus anver sold prooef. more pain ahead unless the fed recognizes the areas of weakness in the real economy along with the soon to be weak remainder of the economy as it pushes rates up when it is obvious we are headedednto a downturn for a large portion of the u.s. economy. alice in california. >> caller: hi, jim. thanks for all you do. my question is about blackstone. this past quarter was their first loss in four years. the stock is down around 8% since. for the long term holder, what do you think? >> i am not going to bet against really smart guys like blackstone. they have the best real estate minds, private equity mines. if i bet against them i have decided that guys who have been
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through thick and thin don't know what they are doing and that's not the case. stick with blackstone. steve schwartzman is a bright guy. dave in i will noisese >> caller: professor cramer from the city of big shoulders and home to the chicago mercantile and options exchanges. >> true. >> caller: today the fda approved a new hemophilia drug. it will be theheirst drug marketed under the baxalta name since the spin off from baxter international earlier in j a global biopharmaceutical leader delivering therapy to patients with orphan diseases they have multiple drugs and phase three trials for under served needs in hematology, immunology and oncology. jim, we know this is a challenging environment to be investing in of late. >> i like this company very much. i i member when it was spun off.
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watch it. this company knows what it's doing. i went over the things you did to teach about what a company does right. this is textbook. let's go to john in n pennsylvania. john? >> caller: boo-yah from philadelphia. i'm asking a question about shake shack. they are going to sell 26 million shares. the stock is over valued. growing into its marart cap. right now it's too expensive for my tastes. i just can't get my arms around how to value it per store versus, for instance, what easterbrook is d dng at mcdonald's. they are night and day but easterbrook has real game. day was a good day. i believe there are things happening beneath the tape that you don't see. there could be more damage to come if the fed doesn't say we
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big ves in the travel world. trying to make a move for westin. and i have more on netflix, alphabet. what's behind these market darlings? what's happeningng i'm getting answers. stick with cramer. >> announcer: don't miss a second of "mad money." llow @jimcramer on t ttter. tweet cramer, # madtweets. send an e-mail to or call 1-800-743-cnbc.
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head to this morning we got big news. we learned marriott is buying star woods, house of sheraton, westin, st. regis among others. $12 million in a difficult to understand transaction. starwood was trying to sell itself for some time but the deal is confusing. the merger will create the largest hotel company. it's a colossus.
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the shareholders get $2 for each stare of starwood. normally in a take over you expect the target stock to go higher or why would management ex-accept thbid? i'm thrilled to have the president and ceo of marriott and adam aaron of starwood here to help us understand the deal. welcome to "mad money." >> thank you. glad to be here. >> why don't you tell me why your stock went up and his went down which seems to be the rhettcally impossible given the fact you are giving him the stock. >> don't make me into a market expert. i'm not. i run hotels. >> we can pull the companies together. we can get revenue synergies, deliver a margin improvement for owners and franchisee, get a dominant company in tlief style
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consumer technology to help compete with new entrants into positive. >> fritz left and the stock was 7.58. why is this betttt than the company he left you and why should people hold on into the combined entity. >> we made progress on a number of fronts. growing much faster than before. we cut costs, reinvigorated the brands, added brands. we got much more assets spinning off in the past and contemplated transactions. 2.3 billion dollars of assets. but when we looked at the industry going forward we think size matters. en we had the opportunity at
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starwood to combine with marriott to jointly create under arnie's -- the highly able leadership, the biggest hotel company in the world by a wide mamain, we knew strategically it was a great fit. then the question is what price do we get for starwood shareholders. we thought we got a spectacular outcome. not well understood today because the transaction is pretty complex. >> it is complex. >> the are four tichbt components to the share price. we think it is far superior to a stand alone case. ybe i should walk yoyothrough it. >> please do. my attitude was i thought you were doing a great job. if there was no bid maybe it would be higher. >> w ware getting .9 for each starwood share getting .92 marriott shares. if you look at today's close you
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$70. they get the value of the spinoff of the timeshare business which would occur preclosing. that's another $6 or $7. now we are up to $76, $77. but there is something more important. we sold for stock, not cash. 37% of the combined marriott, starwood entity. when you look at the revenue synergies and the cost synergies that will arise from putti the companies together, they are huge, divide those back across the shares. this is by far the best way we can growowhe share price above where it was trading a few weeks ago but where we were trading nine months ago and higher still.
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whether this meansnshe cycle is peaking or you needed to do a deal in order to grow both travel could slow down, china. maybe now europe. also because of air r b. the challenge is necessitating this t tnsaction. the reason we were n aggressive early in the process, these things are goingell at marriott. we have momentum, great brands with great demand from the owns and franchisees. we are growing arounthe world. we see a number of years still of good prominent growth ahead. one of the questions was, okay, do we really want to step into this. $13 billion acquisition. all the integration work associated with it. because our base case is a good one. >> do you want all that china? >> absolutely we do. >> why?
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something turning there? >> we think long term and you don't make decisions like this based on what you think will happen next quarter. long term we think the global travel trends are powerful. we have talked about this before. yoyolooked at the way thth were yeyes ago to 2013. there were 650 million people traveling in one week. that's because for the first time they have resources that permit them to travel. where do they want to go besides chcha? to theheestinations they havav heard about. europe, the united states, elsewhere. if we can have more brands, more places for them to stay at brands that are familiar to them with loyalty programs, sbg and marriott rewards that are stronger and connected to them we think it is well worth the effort. in fact, w wthink it is compelling. >> air bnb reallllnot a factor? >> not at all in this transaction. the companies are coming
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1.1 million hotel rooms. 5500 hotels in 30 brands in a hundred countries. starwood will be larger than the next largest hotel company in the industry. we are creating a company with nor use economies of scale. the wref new synergies, cost synergies are dramatic as we put the companies together. that's what starwood was buying into. our shareholders would own 37% of that company that would be a much stronger company than either o oours individually. each of the companies individually is a strong company today. >> let me ask you. both of you are optimists. i know you are working and how you are in real life. there is a funk now going on.
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process. >> it is, isn't it. >> you've got oddly the democrats are in power obviously in the white house. real issues around wage stagnation, income in equality and these things, they are talking down the economic progress. >> it is easy to get a hotel room. i never called youounce to get a staint regis. boy, you can't get in to a lot of the good properties. >> right. >> the republicans are out of power. so they have to say everything is not good. thinin are better than we give credit for. >> thank you. i know your properties and i know i have stayed at both and i wish it were easier to get a hotel reservation. thanks for coming.
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it's terrific. my truststwns this thing and we thought it was ridiculous what happened today. ridiculous. we could be wrong. we're not going to be wrong long term. adam aron and arnie sorenson. good to talk to you. >> coming up. super conductor? der the hood hardware for the devices we use in our everyday lives. could the company continue to in need of a reboot? cramer has the exclusive with the ceo just ahead.[coughing] [coughing] [coughing] [coughing] [coughing] coughing disrupts everyone's life. that's why so many people are turning to delsym for longer lasting cough relief. delsym has an advanced time release formula that helps silence coughs for a full 12 hours. thatat three times longer than the leading cough liquid. all night...
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to anyone who can't handle a little downturn in a high quality high growth stock allow me to use today's rally to make a point. any stock can go down a bit when the market is getting hammered. any stock. yes, even fang. my acronym for facebook, amazon, netflix and google, now alphabet. i was struck by the fact that there are few stocks that have held up in the selling we have been going through. those names also took a hit last week causing people to freak out on twitter in my mentions column where every thirirentry lamented ey lost money with t t four. i say if you own fang you need to think long term. if you can't take points of down
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side you need to rethink your approach to the market. it makes sense that they can go higher. in this economy you want stocks that can rally regardless of gross domestic product growth or whether they decide to raise rates n. a bad enough market they will get hit. they are stocks for heaven's sake. facebook put up an amazing plus 40% growth when it reported earlier this monthth that was aststnding given the size of the enterprise. i think the company is just scratching the surface of the earnings power gen the content is made for nothing and the advertisers are clamoring to give the advertisers money. facebook works better on mobile than the computer. i think the growth is in its infancy. easy to imagine facebook at $4 a share in 2017 which is how far you have to think about this. should the stock with a 40% growth rate be trading at 20% of the 2017 earnings?
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it deserves to bhigher. amazon. now the winner in a moment where bricks and mortar feels like a show room to the company. at one time it was best buy that was the show room. now macy's, nordstrom stymied by the lack o otraffic how do we think anything but amazon is taking the share. you look at the goods with your cell phone and order them. i've done it, you did it. acts of terrorism don't embolden people to go shopping. it should be an amazon christmas. cynical way to think of it. netfliliwas down on news time warner might buy them and hulu. but could hulu cut into the growth of this company? i don't think so. stock bounced back today. google is another hand held application. so much has been exploited. i wonder what the company will do with youtube. can't they think bigger?
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alphabet will do so eventually. even if it's been a failure so far in my y inion. i don't think you can say th. what's the deal? i gave you reasons to like the stocks. why would they go down? the shareholders. my twitter feed was discouraging. when you see the panic when every one of the stocks s es down a couple of bucks there are too many p pple who don't understand the concept of what a stock is. companies probably don't know that either. you can have a good company with a stock that goes lower. facebook, amazon, netflix and alpha, great prospects but the market is selling off. they can't transcend the pull. i'm the biggest champion of fang out there but the stocks can't stay up forever in the market goes lower. it's a tide and it can carry away the most powerful boats including these battleships which are the ultimate in stalwarts lately. if you sold them into weakness,
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i'll bet you are regretting it today. if you're a worrywart ready to fret about every four or five point hit. ring the register and move on. anyone who can't take short term pain doesn't be long in this kind of stock. use today's rallily to sell on strength tomorrow and move your money into an index fund. for all those who own all four, you should call in on wednesday. we play "am i diversified" and i will explain how you are owning one stock in four different guises.. alex. >> caller: thanks for taking my catl. >> of course. >> caller: i established a position in dollar general a while back. since then it's been down 10%. it was an opportunity to buy more stock. i wanted yououtake on the sisiation. let you think of dollar general. >> i have to tell you, i have no edge about what's going to turn the stock around. no edge at all. the group is just really, let's
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say, in free fall. it stabilized today. goes up tomorrow when an analyst rerecommends. i don't trust the dollar stores. walmart is taking it to them let's go to tapin in michigan. >> caller: i want to ask about walmart and your thoughts after the christmas sales. >> i think walmart has decided it is not gogog to earn a lot of money so what you ed to do is sell into strength. you've got a little bit today. i think walmart is dead money. even fang can lose its vipers. facebook, amazon, netflix and google -- now alphabet -- have good prospects. you shouldn't sell them unless you can't handle pain. more ahead. does spirit airlines need savings after the analyst reports? i'm giving the ceo the floor. and everything from the am watch to the new sam sung phone. it's up more than 30% year to date. i will ask the ceo of integrated technology if they can keep
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stick with cramer. > ve they been punishehe enough?? they are adding too much capacity.
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wars of the old days fluchlz we last s ske to the spirit ceo three weeks ago. the quarter was better than expected numbers. suboptimal line items but the stock plunged 8% in one day. since then spirit continues to move lower down 3% since the po quarter interview in october. maybe the analysts who follow spirit are you concerned about the ability to generate earnings growth. but the doubters don't understand the story. remember bacacbefore airline mergers. spirit was the company that was consistently profitable because of the ultra low cost business model where they give you the lowest fares you and charge you for everything else. spirit was a groult airline back then. those were the days when the price e oil was around $10000 barrel. now $42.
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spirit has fallen from 85 to 33. we have to take a closer look at the president and ceo of spirit airlines to explain why the analysts are too negative. ben, welcome back. >> thank you, jim. it's always good to be back. i appreciate it. >> this is a narrative we have to straighten out. i have to tell you. i go back to the october conference call. you said you expect the year over year revevees to decline and the fourth q qrter to be greater than the revenue decline experienced in the third quarter and it freaked people out. wrong or the guidance was misinterpreted. >> i think there are a couple of things going on. obviously the stock has taken a big hit over the last year. industry collapsed because there
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carriers, high cost and low cost carriers are grorong which creates more seats to beilled and lower prices. one thing people are missing including folks on the street i would say is our model is inherently unit revenue diluted. we put seat s on the planes, fly more hours per day and we don't look at unit revenue as the key metric most do. we look at margin and return on investment capital. if you look at the fundamentals of spirit right now, jim, they are stronger than they have been. we are carrying more customers than ever before. our assumable market is bigger than before. the costs are lower and getting even lowow so the reality is we are still -- we still have the growth we had before and the growth is acreating greatly and the company is putting up good numbers. we know the multiple would be back. right now we think the people are over weighted on the one unit revenue metric for the detriment of missing the growth and cost story. >> that's a good point. i have s sn retailers, for instance, try to explain how
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they are making so much more money than everybody else, but the same store sales may not be that good. the truth is your model is so different thth it isn't -- you're really not making up a reason to buy the stock. you have a verspecific model that comes to a new city and it doesn't take necessarily travellers away from business. it adds to travellers entirely. other airlines have tried to dilute that message and that's really hurting. >> i think that's exactly right. we have airlines out there saying look at spirit's market share. doesn't that mean they a a takiki customers. really, what that's conflating is our share of customers and taking customers from other airlines. if you're running an airline and you carry 800 customers a day in a market and yououave 100% share and i come in and lower the price and 200 more people fly and i carry most of them, i'm going to have almost 20% share in the market but you are still carrying even you used to carry. you may say spirit has almost 20%. they must be taking my
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customers. crazy. >> the people who fofoow you are sophisticated people. if you had to try to describe it to our individual investorings who are longer term, how would you say we should not worry about 2016 the way everyone seems to be fretting about? >> if yoyolook at historically at other growth companies in our industry you can take southwest, other companies from other industries. if you look over a longer period it's not uncommon to find maybe a 12-month period where e ps didn't keep up with earnings growth. i'm sorry, eps didn't keep up th capacity growth, i mean. but the reality is spirit from ououipo in 2011. we have sold ourselves to investors as a 15 to 20% growth story with mid teen margins. we have been able to over earn that thanks to lower fuel and lower capacity in the industry. but we still think that story is really credibly intact. in fact, like i said earlier the
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fundamentals are stronger than v. if you are interested in the company that's growing 15 to 20% a year and posting those mid teens or higher when we can margins, we still think the fundamentals look great for spirit. >> in the last months, ever since that great employment number we have seen industries we have seen retailers saying really negive things. dlu to spirit? >> yes we don't think so. only the most comod tiezed piece of the sector. we only sell low fares, not high. if there is weakness in demand at the high fare level we would not see it in our bookings. retail weaknesesor strength doesn't necearily correlate to travel strength in the commodity sector of things. right now we are seeing strong demand for low fares. many airlines are able to
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fuel prices other airlines selle low fares as well. there are people traveling because fares are low. i don'think there's been a year that's been as powerfulle for showing how dramatic low fares are in terms of generating lots of volume and the travel and airline industry is seeing it now. >> i'm glad you came back. look. at a certain point every stock can get the pricicjust seems right to me. your stock has been over punished so it's ridiculous. i'm glad you came back. president and ceo of spirit airlines. good to see you. >> great to be with you. >> it's not just everything goes down all the time. spirit has gotten too cheap. "mad money" is back after the break. the beast was as long as the boat. for seven hours, we did battle. until i said... you will not beat... meeeeee!!! greg. whatathould i do with your fish? ry. just put it in the cooler.
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if you're a fisherman, you tell tales. it's what you do. if you want to save fifteen percent or more on car insurance, you switch to geico. it's what you do. put the fish in the cooler! i'm here at my houou, on thanksgiving day and i have a aassive heart attackkright in my drivewew. the doctor put me on a abayer aspirin regimen. be sure to talk to your doctor before you begin an aspirin regimen. go talk to your doctor. you're not indestructible anymore. americans. we try to live healthy. but many of us don't know there are nutrients that can help support our metatalism. take newewne a day healthy metabolism support multivitamin with chromium to help use carbs from food and b-vitamins to helpconvert food to fuel.
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>> it is time! it is time for the lightning round. cramer's "mad money." you say the name of a stock, i tell you whether to buy or sell. play that sound and the lightning round is over. are you ready ski daddy? tom ininew york. m. >> caller:ello, cramer. boo-yah! >> boo-yah. >> caller: i love your show. how is miguel doing these days? >> i had a fabulous time at the birthday p pty. what's going on? what's going on? >> caller: hey, boo-yah, jim. >> which one? >> caller: ari, apollo commercial. >> it's gogoa high yield.
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i see the stocks, i get nervous. dave in colorado. dave. jim, greetings from colorado. very high yield. defefeible and growing. what do you think? >> they missed the quarter. they came back and i like it. yield is more than 4%. barry, i got hurt on it when they missed the quarter. i do think it is a good situation. m.j. in texas. >> caller: boo-yah, jim. >> boo-yah. >> my question is on imax? >> i think it's right. they have a good t tng. chinininitiative is excellent. mark in new york. mark. >> caller: oh, jim. boo-yah! >> boo-yah. >> caller: okay. first of all, i want to say a prayer to the people affected by the paris attack. i want to say i'm thankful for you and the crew.
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>> thank you. >> caller: doing a great job. you work hard. that spells success. >> thank you. >> caller: todayay would like to lk about harris corprpation. >> so inexpensive. it's in the right spot. >> buy, buy, buy. >> that stock should have been been up more today. bill in south carolina. bill. >> caller: hey, jim. bill from south carolina but originally from brooklyn. >> there you go. >> let's listen to what home depot says. it's too early. why not use that information to get a better picture. anthony in new york. >> caller: how you doing? l brands. >> the one that i think isis right. i buy some before and after. they preannounced business is good. he does a great job. jeff in florida, jeff. >> caller: boo-yah, jim. >> boo-yah. >> caller: i have e ned boeing
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over ten years. i'm up 278%. should i buy, sell -- >> i just want you to hold it. it's a great long-term hold. i believe there will be aerospace traffic, the ten-year plan laid out on the show. the former ceo is still good to o olga in texas. this is olga calling from dallas-ft. worth in texas. thank you for taking my call. >> of course. >> caller: i have been investing for quite some time as a realtor in real estate. i'm always looking for ways to diversify. i have some positions in tech and we are looking into retail since many have dropped significantly. what do you think of nordstrom? >>. >> it's a ridiculous over reaction. i don't like what they said on the quarter and they didn't see why things went wrong. i bet it will be higigr.
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